Other figures

Figure 6: Competitive Labor Market Model

Utility variables:

$$\begin{array}{llllllll} V^N &=& \textrm{The level of utili... ...e level of utility gained from not working.}\\ \end{array}$$

The equations for $V^N$, $V^S$, and $V^A$, in terms of the other variables defined thus far:

$$V^N = w - e + \frac{(1-q)V^N}{(1+r)}+\frac{qV^A}{(1+r).}$$ (5)

$$V^S = w + \frac{(1-q)(1-D)V^S}{(1+r)}+\frac{[1-(1-q)(1-D)]V^A}{(1+r).}$$ (6)

$$V^A = \bar{w} + \frac{sV^N + (1-s)V^A}{(1+r)}.$$ (7)